Debunking 11 Myths About Miles & Points

I had a great time at the annual Chicago Seminars last month meeting many like-minded points and miles enthusiasts at all levels. One of my two sessions that weekend was “Mythbusters: Miles & Points Edition”. Whether you’re new to the hobby or are a long-time veteran, you probably already know that some people just don’t “get us“, and there are a lot of misconceptions about the hobby in general.

Let’s clear the air…

Myth: It’s Too Late To Get Started

Some might argue that the “golden days” are over, but I don’t think that’s necessarily the case. Sure, we’ve seen some great promotions in the past that are no longer with us, such as the US Airways Grand Slam, Club Carlson’s Big Night Getaway that made mattress running profitable, and the American Express gift chain promotion that padded wallets just in time for the holidays a few years back.

Myth: Travel Hacking is Illegal

Earning and redeeming miles and points is certainly not illegal or taboo; in fact, I think having a vast knowledge about how to fully maximize redemption is an attractive skill set to have. But let’s not forget the saying, “pigs get fat, hogs get slaughtered”.

Of course some people will cross lines and take things to the next level, making us all look bad when they cheat the system and act fraudulently (abusing a loophole, stealing, money laundering, etc.). The primary purpose of points and miles serve as an incentive to building loyalty, so let’s play nice and keep it fun, ok?

Myth: The Easiest Way to Earn Miles is By Flying

Sadly this is no longer the case since many airlines have changed their award programs from a distanced-based earnings model to a revenue-based model. Simply put, you’ll earn more miles if you spend big bucks and if you have high-level elite status with the airline. These changes of course hurt the average flyer who are price-motivated when purchasing airfare.

As an example, earlier in the year, I took a round trip flight on United Airlines between Newark and Fort Lauderdale and only earned 600 miles round trip!

In all seriousness, sending myself pity roses at 15x per dollar spent would earn more miles than my round trip flight to FLL!

Since earning butt-in-seat miles by flying is no longer lucrative, credit card points are more valuable than ever, and so are promotions and shopping portal bonuses (even better if they are stackable like this example!).

Myth: Points Suck – I Can Never Use Them

In my opinion, I feel like most loyalty programs aren’t designed with your convenience in mind, and it’s up to you to think outside the box when making a redemption for a free flight or hotel night. The key is to not focus on just one program; you want to diversify your points portfolio so that you can have options when it comes time for a redemption. Different programs have different sweet spots.

If the idea of managing multiple programs scares you, then maybe focus on one program that offer flexible points (such as Ultimate Rewards, Citi Thank You points, and American Express Membership Rewards points). Another practice to master is the art of not searching in one place when redeeming points and miles (such as using United miles only for United flights). Check sites like AwardAce.com to compare redemption options for specific itineraries.

Myth: Credit Cards Are Bad

If I had a mile for every person that told me this, I’d be a million-miler in so many programs, ha! For the record, I have somewhere between 15-20 active credit cards, and this is what my credit score looks like:

A common misconception is that having multiple credit cards lowers your credit score. That’s not true if you are financially responsible and pay your balances on time and in full each month.

Myth: You Must Be Drowning in Debt for a Free Flight

When “normal” people outside of the hobby see my credit-card-stuffed wallet, it’s not unusual for them to gasp and quickly “judge” me, thinking I must be drowning in debt. The fact of the matter is, my credit score has actually improved with my large collection of cards.

As shown above, Having an array of credit actually improves your credit worthiness if you’re organized and spend responsibly. On the other hand, if you’re only making the minimum payments and accumulating interest every month, I’m sorry to say the miles and points hobby may not be for you.

Myth: Credit Cards Are Only Good For The Sign-Up Bonuses

Sure, a large sum of points is a good way to reel a customer into opening up a credit card, but some credit cards come with perks and benefits that are so lucrative that it’s worth it to keep the card open beyond the first year (and even pay annual fees).

For example, it’s worth having an American Express Platinum card because you get awesome perks such as return protection, roadside assistance, lounge access, yearly airline credit, etc. Some hotel credit cards “pay for themselves” too such as the IHG Rewards credit card that comes with a $49 annual fee and a yearly anniversary free night valid at any IHG property.

Myth: All Points Are Worth A Penny

Nope, nopety, nope! The truth is that most miles and points programs are designed to steer the user into redeeming at the lowest value possible, often at one cent per point. It kills me when I stories of friends redeeming valuable points for merchant gift cards or merchandise at 1% value (or less).

The first habit you need to teach yourself is to stop “cashing out” your points for statement credits, gift cards, and “stuff”. Instead, focus on travel redemptions by transferring the points directly into the hotel and airline transfer partner programs, as needed.

Myth: Award Taxes & Fees Are Astronomical – I Might As Well Just Buy a Ticket

Yes, I can certainly agree that some award taxes and fees are so frustrating and unfair (example, $500+ fuel surcharges on Lufthansa First class tickets booked with Aeroplan), but the trick is to think beyond them and focus on the alternatives. For instance, avoid certain programs (such as using British Airways Avios to fly via LHR), and consider alternatives that aren’t subject to hefty surcharges (such as airberlin).

Going back to my Lufthansa example above, sometimes it’s worth taking a moment to decide between using more miles and paying less in cash or vice versa. Lufthansa First Class awards between the USA and Frankfurt can be booked with 110,000 United miles + low taxes & fees -or- 70,000 miles with Air Canada’s Aeroplan program + $500+ in taxes in fees.

Another tip is to play around with your departure points and award origins. Different origins will result in different amounts of fuel surcharges required (example: if you fly Lufthansa and originate from Dublin, Stockholm, or Oslo, you will pay less in fuel surcharges than if you simply departed from Frankfurt).

You can play around and learn on AwardAce.com. Under each column there is a “$” rating system that illustrates how high the fuel surcharges will be within each program.

Lastly, stop paying award-booking close-in fees. There’s a simple hack how you can save $75 each time you book an award with United if you don’t have elite status with the airline. Look out for a post detailing how to do that soon.

Myth: Earning Miles & Points is too Time Consuming – Where’s the Value in That?

First off, consider your journey into the miles and points world as an investment- not only as a financial one, but also as an investment in your happiness. Next, you’ll have to make an effort and truly integrate a miles and points management system into your daily lifestyle, so that it becomes more automated in your day-to-day life. Know which credit cards to use for each purchase, actively credit flight miles and hotel points to respective programs, etc.

It’s really important to have a goal in mind too. Without a plan, you can lose motivation and become less inspired. Do you dream of flying first class to your beach-front oasis in Maui? Or are you yearning to have your entire extended family join you for a family reunion in Orlando? Perhaps you want to visit a celebrity hot-spot like The Maldives. Whatever your dream plans are, be sure to jot them down and create a game plan. Getting started in miles and points is a serious effort, and truthfully may be overwhelming in the beginning. Try to keep it fun and stay current.

If you’re still overwhelmed, you can always outsource when needed. For example, say you have a ton of points but are intimated by all the ways you can use them. Hire an an expert award booking service; there are tons out there.

Myth: My Points Always Expire Before I Can Use Them, Why Bother?

The good news is that most programs are changing in favor of keeping the user happy (for example, points that don’t expire). Familiarize yourself with your programs (knowing their expiration dates, etc.), and be sure to keep your balances active by flying, staying, or by other mileage-earning activities such as shopping online or dining out.

Sometimes miles expire after a significant period of inactivity (usually 2 years), so be mindful about keeping track of your accounts. My favorite free program that allows you to track and manage all miles and points accounts in one place is Award Wallet. There are also many great “out-of-the-box” ways to prevent your miles from expiring in case you might need some ideas!

What miles and points misconceptions have you come across during your journey through the hobby? Feel free to share your thoughts!

About Angelina Aucello

Comments

Well the elephant in the room, which you briefly touched on, is time. How much do you value your lost time when doing this? I’ve seen a few bloggers mention $100/hour as a break even point when considering acting on various deals

So if you spend just 15 minutes per day (probably too conservative) researching, managing, analyzing all aspects of the points world, at $100/hour that comes to a cost of $9,125 per year!

Obviously for anyone hawking credit cards you might be able to get out of that hole, but for most people it’s probably not worth it

If you earn $100/hour, that translates about $208,000/year.
With that kind of income, you might not need any miles/points. You just buy tickets / pay for expensive hotels. $25,000 vacation might not be an issue for you.
Majority of miles enthusiasts will choose another route: get the points and use them for the same $25,000 vacation with a fraction of cost (plus bit of time).

The $100/hour rate isn’t meant to match your actual salary. I would hope it’s much more than your hourly rate at work. If you were going to spend an evening away from your spouse and kids while doing a mattress run, I would hope you value that time in $ much more than being at work

How much do you value your lost time in $/hour? Everyone needs to answer this question

As for $25,000 vacation – where are you going – is that a 3-month vacation?!

I think you also have to ask yourself if it really is lost time to you. I love the research and the discussions and the math. If it’s taking away from time with friends and family, that’s definately something to consider, but this is stuff I do on break at work or during times I’d otherwise be watching TV or playing video games. I don’t consider it lost time. As far as how much to value your time… you have to be reasonable. I could say my time is worth $1000 an hour, but given that I only make $45 an hour in general, the $1000 figure is absurd. Even saying my time is worth $100 an hour would be a stretch.
$25K vacation is easy. Just finished a ~$40K one in Dubai and Maldives. Factor in what the cost of a first class ticket would have been for two people without using miles (16K), what hotels would have cost without points and free night certificates (6300) transportation, food, room upgrades, excursions, and what return business class would have cost (5K).
Next year have a 35K+ one planned to Madagscar. Otherwise a $16K one way ticket on SQ suites for the two of us, then the cost of the safari, return in business class on SQ (9600), and what the hotels would have cost without points (TBD)

Well no one actually pays the those listed airline or hotel rates so it’s a little silly to quote them.

Re: “$16K one way ticket on SQ suites for the two of us” – probably costs you around 150k miles right? You can buy these miles at 3.5-5.0 cents per mile with zero effort, which would cost you around $5-6k. And that’s the worst case scenario… like I said no one pays anywhere close to $16,000

And let’s be honest, having a suite for a 10-hour flight is nice… but you’ll be asleep half of the time… so for the other 5 hours, at $16,000 cost are you really getting a value of over $3,000 per hour?! :)

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